Croatia Outlines Plan to Tame Deficit by 2018

Croatia's government on Thursday agreed an economic convergence programme for the 1015-2018 period, which will be submitted to the European Commission for approval.

The report assessed the main economic indicators, planned mechanisms for controlling negative trends and planned reforms aimed at keeping the budget deficit and public debt in check.

Deputy Prime Minister Branko Grcic presented the convergence programme, which shows improvements in some economic indicators and state finances.

He said Croatia's GDP would rise from 0.4 per cent in 2015 to 1.5 per cent in 2018.

Regarding the large budget deficit, amounting to 5.7 per cent of GDP in 2014, Grcic predicted a significant improvement.

"The programme projects a reduction of the budget deficit from 5.7 per cent, as it was in 2014, to 5 per cent this year, 4 per cent in 2016 and 2.7 per cent in 2017," he stated.

Croatia's public debt, which was equivalent to 85 per cent of annual GDP in 2014, will continue to rise until 2017, after which point it will decline, he claimed.

"Public debt should grow until 2017 when it should reach a maximum of 92.6 per cent of GDP, and then it should start to fall," he said, adding that measures of fiscal consolidation in the excessive budget deficit procedure would have an influence on this.

According to the convergence programme, household consumption - as one of the generators of economic growth - will grow by 0.5 per cent this year and by 1.1 per cent a year by 2018. On the other hand, state spending will fall continuously over the four-year period.

Although investments are expected to fall by 1.3 per cent in 2015, by 2018 investments are estimated to grow by some 3.6 per cent.

Exports, one of the most positive current...